Like many aspects of buying a home, the process of putting an offer on a house is slightly different in Scotland than it is in other parts of the UK.
In this article we take a look at all the things you need to have in place before you try and make an offer. We'll also share some tips on how to improve your chances of having your offer accepted.
Although there's a fair bit of jargon to get your head around, taking the first step to securing your dream home doesn't need to be difficult.
Unlike making an offer in England, there are a number of steps you have to take before you can put an offer on a property in Scotland.
The process generally follows this timeline:
A mortgage in principle is a letter from a mortgage lender stating that they are happy to lend money to you (if a property meets the correct criteria) along with an estimation of how much you could, in theory, afford to borrow. Arranging a mortgage in principle demonstrates to sellers that you've considered your financial situation, and shows how much you can afford to spend. Many sellers won't consider offers from buyers who can't show they are in the financial position to proceed.
If you don't need a mortgage, you'll need to be able to demonstrate that you have the cash available to purchase the property outright (plus any additional fees like LBTT).
Once you know how much you can spend, you can start the fun part: finding your dream home. Most people start their search on online property portals, or by talking to local estate agents. Signing up for alerts from a few different local estate agents will help you get the first look at new-to-market properties.
It's at this point you should consider hiring a solicitor or conveyancer is you haven't already. You'll need a solicitor if you plan on making an offer, and finding someone you want to work with early in the process will save you rushing at the last minute. It's worth shopping round for the best conveyancer you can - they will be your negotiating representative, and are vital to ensuring your sale goes ahead smoothly.
Once you've found a home you like, request the home report from the estate agent. You should look through this with your conveyancer. Pay particular attention to the results of the property survey, which will give you insight into the condition of the property, and the property valuation.
If you're happy with everything in the home report, you can now arrange searches on the property. Searches are investigations into the property and the local area. These will provide information about the land the building sits on, and any local developments you might want to be aware of. For example, a search will let you know how at risk a property is of flooding, or if there are plans to build a motorway near the house.
You can do searches after submitting an offer, to avoid paying the fee. However, this can make your offer less appealing to the seller, particularly if there are other buyers interested. Ask your conveyancer for their advice before deciding.
If you're happy with everything you've seen so far, now's the time to note your interest. A note of interest doesn't tie you into buying the property. It is simply a letter to the seller's solicitor saying that you'd like to be kept up to date with any developments related to the property, such as the setting of a 'closing date' (the deadline for sending formal offers). This letter will be submitted by your conveyancer. At this point the seller's solicitor might let you know how many other notes of interest the property has received.
Once you've expressed your interest, it's time to confirm your finances. Your mortgage provider will want to know that the house you want to buy is worth the amount you need to borrow. Your lender may use the valuation provided in the home report, or they may request an independent valuation.
Once you've confirmed that you'll be able to borrow the money you need, you can place an offer. In Scotland, rather than calling the estate agent, your solicitor will write an offer letter to the seller's solicitor. If a closing date has been specified, the seller's solicitor will open all the offer letters on the specified day. You should expect to receive a response shortly after.
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Submitting your offer isn't as simple as telling the seller how much you're willing to pay. Your conveyancer will need to send a formal letter, including the following details:
It's important to include a specific description of the property you want to buy. This should include the address, and a few basic details about the house. Your conveyancer will be able to help with how specific you need to be.
This is the amount you are offering to pay for the house, and should not include your offer for any extras that you might want included, such as particular fixtures or white goods.
The date of entry is is the day that you'd like to transfer the money to the seller, and pick up the keys.
In this separate section, you can detail which additional fixtures and fittings you'd like to be included in the sale, and what you're willing to offer for them.
Conditions of sale are legal caveats that will protect you during the purchase process. These will include things like: ensuring the seller is legally allowed to sell the property, or checking that there aren't any restrictions on the title deed. If these conditions aren't fulfilled, you will be allowed to withdraw your offer without any penalties.
This is the date by which the buyer has to decide whether to accept or reject your offer. Often if a 'closing date' is set, you will find out whether your offer has been accepted or rejected on this day. If no closing date is set, the seller will need to respond by the deadline set in your offer letter.
If your offer is accepted, the seller's conveyancer will reply with a letter of either 'qualified' or 'unqualified' acceptance. 'Qualified' acceptance means your offer has been provisionally accepted subject to some additional conditions. An 'unqualified' acceptance means your offer has been accepted as you presented it, with no extra conditions.
Yes, in Scotland, you have to have a solicitor in order to make an offer on a house. This is because your offer letter is technically the first of the missives that will eventually form the final contract of sale.
Verbal or informal offers sent directly from a buyer to a seller are very unlikely to be taken seriously.
No, an offer isn't a legally binding contract.
A property purchase in Scotland only becomes binding with the 'conclusion of missives'. Missives are letters between your conveyancer and the seller's conveyancer, in which they negotiate the conditions of the property purchase.
Your formal offer is technically the first 'missive'. While on it's own, it is not legally binding, it can quickly become so. If the seller's solicitor responds with an 'unqualified acceptance', agreeing to all the terms that you've laid out in your offer letter, the purchase will become legally binding. At this point there will be financial penalties for withdrawing.
Therefore, you should only make an offer if you are prepared to be legally tied into the sale very quickly.
If you're interested in buying a house, but are not 100% sure that you're ready to make an offer, remember you can also submit a 'note of interest'. Noting your interest does not oblige you to make a formal offer, however, you will be kept up to date with any developments relating to the property sale, including interest from other buyers. This should give you time to decide whether putting in an offer is right for you, before you commit.
In Scotland, it's very common for a property seller to ask for 'offers over' a certain asking price.
Usually, properties will be priced competitively in order to attract interest from a number of buyers. Then the seller will set a 'closing date' by which all the interested buyers have to submit their best and final bids. These bids are normally sealed, so you won't know how much the other buyers are offering. This can lead to buyers making offers that are much higher than the asking price.
Before you submit your sealed bid, look through the valuation included in the home report carefully. Your mortgage lender is unlikely to allow you to borrow more than this amount - if you decide to offer over the valuation amount, you'll need to make up the difference. You may also want to consider the condition of the property & potential costs of repairs. If you're unsure how much these things will cost to take care of, request some estimates from independent trades people in the area.
It can also be helpful to look at property market trends in the local area. How much have recent similar properties sold for? How long did it take for other properties on the market to sell? This information can help to give you a general sense of what is a reasonable amount to offer.
You could also use an online valuation tool to get a quick estimate of how much the property is worth. Our free valuation tool combines data about recently sold properties in your area with information you input about the condition and unique features of the property. Combined with the home report valuation, and your mortgage lender's limitations, this estimate will give you a sense of how much is reasonable to offer. Check it out here.
Top tip: If no closing date has been specified on a property that is soliciting 'offers over', this could mean that nobody else has noted their interest. In this case you may be able to negotiate a lower purchase price with the seller.
If a property is marketed as 'fixed price', this means the buyer will sell the property to the first person who offers the asking price.
In practice, it's actually slightly more complicated. The seller is not legally obligated to sell to the first person to offer the full asking price. They may also take into account other things, like a buyer's financial position, or their requested 'date of entry'. A first time buyer without a chain, that's able to move in quickly, is likely to be much more appealing to a seller than someone who needs to sell their current home before they can move.
If you're unsure how much you should offer, ask your solicitor for advice. They'll be able to provide support based on your personal financial situation.
The 'date of entry' is the day that the money is transferred to the seller, and you can pick up the keys to your new home.
How important this is to having your offer accepted will depend on the seller's personal situation. Some sellers will be keen to move on a particular day - perhaps they're starting a new job, or they're part of a chain and need to sell before they can purchase their next house.
If you're able to be flexible with the move date, talk to the estate agent about the seller's situation, and ask whether they're after anything in particular. Being able to compromise on the date of entry can make you a more attractive buyer and help your offer get accepted.
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